German consumer confidence hits record high as energy bill fears soar | News | DW
The energy crisis and high inflation have pushed German consumer confidence to an all-time high, research firm GfK said on Friday.
Gfk’s consumption barometer recorded a surprising drop of 5.6 points in July to -36.5.
The barometer, based on a survey of 2,000 German consumers, had not recorded such a low figure since its creation in 1991.
“This month, a sudden increase in the desire to save saw consumer sentiment continue its steep decline. It again hit a new high,” said GfK consumer expert Rolf Bürkl.
Bürkl added that the Germans were setting aside their savings for an expected sharp rise in energy costs this winter.
“If households have to pay a lot more for energy and food, they don’t have the financial means for other purchases,” he said.
Germans on edge over further price hikes
Bürkl warned that from a consumer perspective, the risk of recession remains high, especially if Germany faces gas shortages this winter, which would push heating prices even higher.
The German government fears that Russia will completely cut off Europe’s natural gas supply in retaliation for sanctions imposed on Moscow during the war in Ukraine.
In recent months, Russian gas deliveries have sometimes been reduced to a trickle.
A separate survey by Civey researchers for Business Insider magazine on Thursday found that more than half of Germans were already trying to save energy to reduce their bills.
Meanwhile, prices are expected to continue rising in the fall, in part due to a new natural gas surcharge to help energy importers.
While inflation has risen sharply over the past year – standing at 7.5% in July – German residents have benefited from subsidized public transport and fuel fares over the summer.
Both perks are due to run out at the end of August.
Recession expected by the end of the year
Europe’s largest economy saw zero growth in the second quarter of the year, according to Destatis, the federal statistics agency.
Production was affected by supply chain issues, soaring energy and food prices, exacerbated by Russia’s invasion of Ukraine.
The business climate also fell to its lowest level since June 2020, when Germany emerged from its first COVID-19 lockdown.
The Munich-based Ifo Institute for Economic Affairs said business confidence fell to 88.6 in July from 92.2 in June.
The Ifo warned that uncertainty among businesses remains high as they expect the economy to contract in the third quarter.
A separate Ifo survey found German exporter confidence falling for the third month in a row.
While a majority of industries expect exports to decline, automakers and their suppliers are eyeing significant growth, the think tank said on Friday.
German industry is also already achieving significant energy savings due to soaring costs and shortage fears.
Germany’s Federal Network Agency on Thursday reported a 21.3% drop in consumption by industrial consumers in July, compared to the average for that month over the previous four years.
The government has ordered public buildings to lower the thermostat and turn off lights at night at tourist attractions.
mm/sms (AFP, dpa, Reuters)